Firms are laying off workers even as business revives. That boosts profits--at the cost of morale

When Winstar Radio Services laid off a third of its New York City staff, the surviving employees felt little relief. Not only had they lost cherished colleagues, but they were also struggling with added work--particularly that of the office manager, who was among those who got pink slips. Although the remaining workers at Winstar (since acquired and renamed Excelsior Radio Networks) resigned themselves to doing their own filing and photocopying, they overlooked one small but essential task. Says Christopher Stogdill, 32, an affiliate marketing manager: "We ran out of toilet paper."